Els reports fourth quarter results
Chicago--(business wire)--equity lifestyle properties, inc. (nyse: els) (referred to herein as "we," "us," and "our") today announced results for the quarter and year ended december 31, 2017. all per share results are reported on a fully diluted basis unless otherwise noted. financial results for the quarter and year ended december 31, 2017 for the quarter ended december 31, 2017, total revenues increased $16.0 million, or 7.5 percent, to $230.0 million compared to $214.0 million for the same period in 2016. net income available for common stockholders for the quarter ended december 31, 2017 increased $8.0 million, or $0.08 per common share, to $45.0 million, or $0.51 per common share, compared to $37.0 million, or $0.43 per common share, for the same period in 2016. for the year ended december 31, 2017, total revenues increased $54.9 million, or 6.3 percent, to $925.3 million compared to $870.4 million for the same period in 2016. net income available for common stockholders for the year ended december 31, 2017 increased $25.9 million, or $0.25 per common share, to $189.9 million, or $2.17 per common share, compared to $164.0 million, or $1.92 per common share, for the same period in 2016. non-gaap financial measures and portfolio performance for the quarter ended december 31, 2017, funds from operations ("ffo") available for common stock and op unit holders increased $6.9 million, or $0.06 per common share, to $79.4 million, or $0.84 per common share, compared to $72.5 million, or $0.78 per common share, for the same period in 2016. for the year ended december 31, 2017, ffo available for common stock and op unit holders increased $28.9 million, or $0.28 per common share, to $331.7 million or $3.55 per common share, compared to $302.8 million, or $3.27 per common share, for the same period in 2016. for the quarter ended december 31, 2017, normalized funds from operations ("normalized ffo") available for common stock and op unit holders increased $7.4 million, or $0.07 per common share, to $82.6 million, or $0.88 per common share, compared to $75.2 million, or $0.81 per common share, for the same period in 2016. for the year ended december 31, 2017, normalized ffo available for common stock and op unit holders increased $29.4 million, or $0.29 per common share, to $335.9 million, or $3.60 per common share, compared to $306.5 million, or $3.31 per common share, for the same period in 2016. for the quarter ended december 31, 2017, property operating revenues, excluding deferrals, increased $12.4 million to $215.3 million compared to $202.9 million for the same period in 2016. for the year ended december 31, 2017, property operating revenues, excluding deferrals, increased $56.8 million to $875.9 million compared to $819.1 million for the same period in 2016. for the quarter ended december 31, 2017, income from property operations, excluding deferrals and property management, increased $5.3 million to $125.0 million compared to $119.7 million for the same period in 2016. for the year ended december 31, 2017, income from property operations, excluding deferrals and property management, increased $28.9 million to $508.8 million compared to $479.9 million for the same period in 2016. for the quarter ended december 31, 2017, core property operating revenues, excluding deferrals, increased approximately 6.2 percent and core income from property operations, excluding deferrals and property management, increased approximately 4.7 percent compared to the same period in 2016. for the year ended december 31, 2017, core property operating revenues, excluding deferrals, increased approximately 5.8 percent and core income from property operations, excluding deferrals and property management, increased approximately 5.0 percent compared to the same period in 2016. acquisition activity during the quarter, we completed the acquisition of bethpage camp resort and grey's point camp, two rv resorts located in chesapeake bay, virginia, having 1,034 and 728 sites, respectively. the aggregate purchase price of $134.4 million was funded with sales of shares of our common stock under our at-the-market ("atm") equity offering program as discussed further below, proceeds from our revolving credit facility, and available cash. balance sheet activity during the quarter, we sold 895,104 shares of common stock as part of our atm equity offering program at a weighted average price of $87.88, resulting in net cash proceeds of $77.7 million. on october 16, 2017, we entered into a $204.4 million secured facility with fannie mae, maturing in 2037 and bearing interest at 3.97 percent per annum. we used the proceeds to pay, in full, $202.2 million of loans including $2.7 million in early debt retirement costs. these loans were scheduled to mature in 2018. on october 27, 2017, we entered into a new credit agreement, which amends and restates the terms of the obligations owed by us under the previous credit agreement dated as of july 17, 2014. under the new credit agreement, we have access to a $400.0 million unsecured line of credit ("loc") and a $200.0 million senior unsecured term loan. in conjunction with the new credit agreement, we also extended the maturity of our term loan to april 27, 2023. hurricane irma during the quarter ended december 31, 2017, we recorded expense of $4.3 million related to debris removal and cleanup following hurricane irma. in addition, we recorded insurance recovery revenue of $5.5 million, which includes insurance proceeds received as a result of our first claim submission. during the quarter ended december 31, 2017, operations at our florida keys rv resorts were interrupted, therefore we designated them as non-core properties. this change is reflected throughout the results presented in this release and in our supplemental financial information package. about equity lifestyle properties we are a self-administered, self-managed real estate investment trust ("reit") with headquarters in chicago. as of january 29, 2018, we own or have an interest in 406 quality properties in 32 states and british columbia consisting of 151,323 sites. for additional information, please contact our investor relations department at (800) 247-5279 or at investor_relations@equitylifestyle.com. conference call a live webcast of our conference call discussing these results will take place tomorrow, tuesday, january 30, 2018, at 10:00 a.m. central time. please visit the investor information section at www.equitylifestyleproperties.com for the link. a replay of the webcast will be available for two weeks at this site. reporting calendar quarterly financial results and related earnings conference calls for the next three quarters are expected to occur as follows: forward-looking statements in addition to historical information, this press release includes certain "forward-looking statements" within the meaning of the private securities litigation reform act of 1995. when used, words such as "anticipate," "expect," "believe," "project," "intend," "may be" and "will be" and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions. these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to: our ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of sites by customers and our success in acquiring new customers at our properties (including those that we may acquire); our ability to maintain historical or increase future rental rates and occupancy with respect to properties currently owned or that we may acquire; our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts; our assumptions about rental and home sales markets; our assumptions and guidance concerning 2018 estimated net income, ffo and normalized ffo; our ability to manage counterparty risk; in the age-qualified properties, home sales results could be impacted by the ability of potential home buyers to sell their existing residences as well as by financial, credit and capital markets volatility; results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing; impact of government intervention to stabilize site-built single-family housing and not manufactured housing; effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions; the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto; unanticipated costs or unforeseen liabilities associated with recent acquisitions; ability to obtain financing or refinance existing debt on favorable terms or at all; the effect of interest rates; the dilutive effects of issuing additional securities; the effect of accounting for the entry of contracts with customers representing a right-to-use the properties under the codification topic "revenue recognition"; the outcome of pending or future lawsuits or actions brought against us, including those disclosed in our filings with the securities and exchange commission; and other risks indicated from time to time in our filings with the securities and exchange commission. for further information on these and other factors that could impact us and the statements contained herein, refer to our filings with the securities and exchange commission, including "risk factors" in our most recent annual report on form 10-k and subsequent quarterly reports on form 10-q. these forward-looking statements are based on management's present expectations and beliefs about future events. as with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. we are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. investor information dbabin@rwbaird.com gmehta@cantor.com rburke@greenstreetadvisors.com rlumb@greenstreetadvisors.com bank of america merrill lynchglobal research jeff.spector@baml.com michael.bilerman@citi.com todd.stender@wellsfargo.com nicholas.joseph@citi.com johnp.kim@bmo.com steve.sakwa@evercoreisi.com samir.khanal@evercoreisi.com 1. any opinions, estimates or forecasts regarding our performance made by these analysts or agencies do not represent our opinions, forecasts or predictions. we do not by reference to these firms imply our endorsement of or concurrence with such information, conclusions or recommendations. financial highlights (in millions, except common stock and op units outstanding and per share data, unaudited) december 31, 2017 september 30, 2017 june 30,2017 march 31,2017 december 31,2016 and per share data 1. see non-gaap financial measure definitions and other terms at the end of the supplemental information for definitions of adjusted ebitda, ffo, normalized ffo and fad; and reconciliation of consolidated net income to adjusted ebitda. 2. see page 7 for a reconciliation of net income available for common stockholders to non-gaap financial measures ffo available for common stock and op unit holders, normalized ffo available for common stock and op unit holders and fad available for common stock and op unit holders. 3. see page 16 for market capitalization calculation as of december 31, 2017. 4. calculated using trailing twelve months adjusted ebitda. we believe trailing twelve months adjusted ebitda provides additional information for determining our ability to meet future debt service requirements. 5. interest coverage is calculated by dividing trailing twelve months adjusted ebitda by the interest expense incurred during the same period. 6. see non-gaap financial measure definitions and other terms at the end of the supplemental information for a definition of fixed charges. this ratio is calculated by dividing trailing twelve months adjusted ebitda by the sum of fixed charges and preferred stock dividends during the same period. balance sheet (in thousands, except share and per share data) december 31,2017(unaudited) december 31,2016 consolidated income statement (in thousands, unaudited) non-gaap financial measures fourth quarter 2017 - selected non-gaap financial measures (in millions, except per share data, unaudited) december 31,2017 1. see non-gaap financial measure definitions and other terms at the end of the supplemental information for definitions of non-gaap financial measures income from property operations, excluding deferrals and property management, and core, and reconciliation of income from property operations, excluding deferrals and property management to income before equity in income of unconsolidated joint ventures. see page 9 for details of the 2017 core income from property operations, excluding deferrals and property management. 2. see non-gaap financial measure definitions and other terms at the end of the supplemental information for a definition of non-core properties. see page 10 for details of the income from property operations, excluding deferrals and property management for the non-core properties. 3. see page 7 for a reconciliation of net income available for common stockholders to non-gaap financial measures ffo available for common stock and op unit holders, normalized ffo available for common stock and op unit holders and fad available for common stock and op unit holders. see definitions of non-gaap financial measures of ffo, normalized ffo and fad and non-revenue producing improvements in non-gaap financial measure definitions and other terms at the end of the supplemental information. 4. included in general and administrative on the consolidated income statement on page 4. reconciliation of net income to non-gaap financial measures (in thousands, except per share data, unaudited) 1. we are required by gaap to defer, over the estimated customer life, recognition of non-refundable upfront payments from sales of new and upgrade right-to-use contracts. for 2017, the customer life is estimated to be 40 years and is based upon our experience operating the membership platform since 2008. the amount shown represents the deferral of a substantial portion of current period upgrade sales, offset by amortization of prior period sales. 2. we are required by gaap to defer recognition of commissions paid related to the entry of right-to-use contracts. the deferred commissions will be amortized using the same method as used for the related non-refundable upfront payments from the entry of right-to-use contracts and upgrade sales. the amount shown represents the deferral of a substantial portion of current period commissions on those contracts, offset by the amortization of prior period commissions. 3. see non-gaap financial measure definitions and other terms at the end of the supplemental information for non-gaap financial measure definitions of ffo, normalized ffo and fad and for a definition of non-revenue producing improvements. 4. included in general and administrative on the consolidated income statement on page 4. 5. during the quarter ended september 30, 2017, we redeemed our 6.75% series c preferred stock for $136.1 million. in connection with the redemption, we recorded expense of $0.8 million for the original issuance costs associated with the series c preferred stock. 6. litigation settlement, net of $2.4 million for the quarter and year ended december 31, 2016, related to resolution of the california lawsuits. consolidated income from property operations (1) (in millions, except home site and occupancy figures, unaudited) 2017 core income from property operations (1) (in millions, except home site and occupancy figures, unaudited) change (2) change (2) non-core - income from property operations (1) (in millions, unaudited) quarterended year ended december 31,2017 december 31,2017 income from rental home operations (in millions, except occupied rentals, unaudited) 2,376 4,751 net ofdepreciation net ofdepreciation total rental homes total sites and home sales (in thousands, except sites and home sale volumes, unaudited) 2018 guidance - selected financial data (1) our guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. factors impacting 2018 guidance include, but are not limited to the following: (i) the mix of site usage within the portfolio; (ii) yield management on our short-term resort sites; (iii) scheduled or implemented rate increases on community and resort sites; (iv) scheduled or implemented rate increases in annual payments under right-to-use contracts; (v) occupancy changes; (vi) our ability to retain and attract customers renewing or entering right-to-use contracts; (vii) our ability to integrate and operate recent acquisitions in accordance with our estimates; (viii) completion of pending transactions in their entirety and on assumed schedule; (ix) ongoing legal matters and related fees; and (x) costs to restore property operations and potential revenue losses following storms or other unplanned events. (in millions, except per share data, unaudited) 2018 core guidance assumptions (1) (in millions, unaudited) quarterended firstquarter 2018 march 31,2017 growthfactors (2) december 31,2017 growthfactors (2) 2018 assumptions regarding non-core properties (1) (in millions, unaudited) march 31,2018 (4) december 31,2018 (4) right-to-use memberships - select data (in thousands, except member count, number of thousand trails camping pass, number of annuals and number of upgrades, unaudited) year ended december 31, 2018 (1) market capitalization (in millions, except share and op unit data, unaudited) totalcommonstock/units % of totalcommon stock/units % of totalmarketcapitalization debt maturity schedule debt maturity schedule as of december 31, 2017 (in thousands, unaudited) secureddebt(1) weightedaverageinterestrate unsecureddebt weightedaverageinterestrate(1) % oftotaldebt weightedaverageinterestrate(1) (1) (1) non-gaap financial measures definitions and other terms this document contains certain non-gaap measures used by management that we believe are helpful in understanding our business, as further discussed in the paragraphs below. we believe investors should review these non-gaap measures along with gaap net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity reit’s operating performance. our definitions and calculations of these non-gaap financial and operating measures and other terms may differ from the definitions and methodologies used by other reits and, accordingly, may not be comparable. these non-gaap financial and operating measures do not represent cash generated from operating activities in accordance with gaap, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with gaap, as an indication of our financial performance, or to cash flow from operating activities, determined in accordance with gaap, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. funds from operations (ffo). we define ffo as net income, computed in accordance with gaap, excluding gains and actual or estimated losses from sales of properties, plus real estate related depreciation and amortization, impairments, if any, and after adjustments for unconsolidated partnerships and joint ventures. adjustments for unconsolidated partnerships and joint ventures are calculated to reflect ffo on the same basis. we compute ffo in accordance with our interpretation of standards established by the national association of real estate investment trusts ("nareit"), which may not be comparable to ffo reported by other reits that do not define the term in accordance with the current nareit definition or that interpret the current nareit definition differently than we do. we receive up-front non-refundable payments from the entry of right-to-use contracts. in accordance with gaap, the upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life. although the nareit definition of ffo does not address the treatment of non-refundable right-to-use payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of ffo. we believe ffo, as defined by the board of governors of nareit, is generally a measure of performance for an equity reit. while ffo is a relevant and widely used measure of operating performance for equity reits, it does not represent cash flow from operations or net income as defined by gaap, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance. normalized funds from operations (normalized ffo). we define normalized ffo as ffo excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisition and other transaction costs related to mergers and acquisitions; and d) other miscellaneous non-comparable items. normalized ffo presented herein is not necessarily comparable to normalized ffo presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount. funds available for distribution (fad). we define fad as normalized ffo less non-revenue producing capital expenditures. we believe that ffo, normalized ffo and fad are helpful to investors as supplemental measures of the performance of an equity reit. we believe that by excluding the effect of depreciation, amortization, impairments, if any, and actual or estimated gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, ffo can facilitate comparisons of operating performance between periods and among other equity reits. we further believe that normalized ffo provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our operations. for example, we believe that excluding the early extinguishment of debt, property acquisition and other transaction costs related to mergers and acquisitions from normalized ffo allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. in some cases, we provide information about identified non-cash components of ffo and normalized ffo because it allows investors, analysts and our management to assess the impact of those items. income from property operations, excluding deferrals and property management. we define income from property operations, excluding deferrals and property management as rental income, utility income and right-to-use income less property operating and maintenance expenses, real estate tax, sales and marketing expenses, property management and the gaap deferral of right-to-use contract upfront payments and related commissions, net. we believe that this non-gaap financial measure is helpful to investors and analysts as a measure of the operating results of our manufactured home and rv communities. the following table reconciles net income available for common stockholders to income from property operations (amounts in thousands): earnings before interest, tax, depreciation and amortization (ebitda) and adjusted ebitda. ebitda is defined as net income or loss before interest income and expense, income taxes, depreciation and amortization. we define adjusted ebitda as ebitda excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisition and other transaction costs related to mergers and acquisitions; d) gaap deferral of right-to-use contract upfront payments and related commissions, net; e) depreciation on unconsolidated joint ventures; f) impairments, if any; and g) other miscellaneous non-comparable items. ebitda and adjusted ebitda provide us with an understanding of one aspect of earnings before the impact of investing and financing charges. we believe that ebitda and adjusted ebitda may be useful to an investor in evaluating our operating performance and liquidity because the measures are widely used to measure a company’s operating performance and they are used by rating agencies and other parties, including lenders, to evaluate our creditworthiness. the following table reconciles consolidated net income to ebitda and adjusted ebitda (amounts in thousands): core. the core properties include properties we owned and operated during all of 2016 and 2017. we believe core is a measure that is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations. non-core. the non-core properties include all properties that were not owned and operated in 2016 and 2017. this includes, but is not limited to, three properties acquired during 2017, four properties acquired during 2016, and tropical palms rv resort. non-core properties also includes sunshine key and fiesta key rv resorts. income from rental operations, net of depreciation. we use income from rental operations, net of depreciation as an alternative measure to evaluate the operating results of our home rental program. income from rental operations, net of depreciation, represents income from rental operations less depreciation expense on rental homes. we believe this measure is meaningful for investors as it provides a complete picture of the home rental program operating results including the impact of depreciation which affects our home rental program investment decisions. non-revenue producing improvements. represents capital expenditures that will not directly result in increased revenue or expense savings and are primarily comprised of common area improvements, furniture, and mechanical improvements. fixed charges. fixed charges consist of interest expense, amortization of note premiums and debt issuance costs.
